Countrywide Financial, America’s largest mortgage lender, issued a profit warning for the year yesterday and sent shockwaves across the credit industry when it declared that the problems with its high-risk subprime home loans had spread to its prime loan book. The Times

It also reported a 33% fall in second-quarter net income to $485.1m (£236.5m), as it wrote down the value of home loan assets related to borrowers with strong credit ratings by $388m.